As the national debt clock spins towards the flashing red zone of 20 trillion dollars — a level greater than our gross domestic product — policymakers will need to find serious solutions to balance the nation’s books. The challenge ahead is one that will only be solved with a combination of policy changes, novel practices, and specific reform initiatives conducted over time. Fortunately, a handful of promising options are starting to emerge, which may help to broadly reduce federal expenditures and serve as catalysts for institutional change in government planning and execution.
One of these options is Shared Services — an increasingly attractive and sensible concept that is gaining interest in both the executive branch and Congress. Shared services is basically an administrative service designed to meet common, standardized requirements of multiple agencies with delivery of those services by third-party providers (public or private), often in the areas of information technology, business processes, or labor components. Though not entirely new, the idea of shared services in government is particularly timely and valuable now, given the pressing need to cut costs and reduce waste wherever we can. Beyond the obvious fiscal advantages, shared services also represents a data-driven, targeted, and fact-informed approach to reducing unnecessary government duplication, agency stove-piping, and other counter-productive inefficiencies that too often mark the operations of government. Shared services is not simply a way to save money, but a way to get government to work better for its citizens.
Even the most basic efforts to share services between departments, agencies, and programs can have profoundly positive effects. In the information technology sector alone, sharing common platforms — such as payment systems, human resource databases, and basic computer software — can save millions of dollars. In fact, considering what the federal government spends on IT — the 2018 budget asked for roughly $95.7 billion for federal IT — the savings could actually be tens of millions of dollars or more. Like any reform initiative, individual efforts may seem modest at first; but institutionalized approaches can generate significant returns in the aggregate.
For those in executive branch agencies who have to make increasingly difficult decisions about human resources, acquisition and procurement, or transitions in the wake of policy or budgetary shifts, shared services can actually make it easier to make decisions. Savings accrued through a shared service might in fact save someone’s job.
Additionally (and perhaps most importantly), shared services allows for administrators to achieve cost savings without fundamentally detracting from mission accomplishment — this is the desired “sweet-spot” between fulfilling government obligations and fiscal responsibility. In fact, utilizing a shared service may actually improve mission achievement, program performance, or interoperability. This is especially important in national security, where the failure of agencies to work well together can mean the difference between life and death. Finally, shared services can address the growing challenge of obsolescence in “legacy systems.” Legacy systems in government are business critical platforms that remain in use but that are obsolete, subject to concerning hardware aging, no longer meet all needs of the user, or are no longer supported with updates or upgrades. In many cases, these legacy systems are becoming costlier to maintain, harder to supply, and less compatible with new technology that is being used across government — from the VA to HHS — to improve accountability, reduce backlog, and streamline delivery of service.
The Trump administration has already begun to look at what shared services can do. Executive Order 13781, signed in March, and OMB Memorandum M-17-22, singed in April, are both guiding documents that address how shared services can improve government planning and budgeting. In fact, under its Crosscutting Reform Proposals section, M-17-22 specifically states that:
Examples of crosscutting reforms may include areas where market or technology changes allow a service to be delivered more efficiently, such as by a shared service provider, or where multiple Federal agencies interact in fragmented or duplicative ways with State, local, and Tribal governments or other stakeholders.
Additionally, certain leaders in the administration are already using shared services to reduce acquisition timelines, save costs, and increase interoperability. For example, Veterans Affairs Secretary Shulkin recently elected to use the health records system currently used by Department of Defense for the VA.
Actually putting shared services into practice will require some effort. Far too often, the most sensible, non-partisan, and comprehensively beneficial ideas are lost for the most basic of reasons. The government will need constant focus on the monetary and operational value of shared services. And institutional resistance will prove a challenge as well; anyone who has spent any significant time within the Beltway knows first-hand the difficulty of changing commonly accepted practices. But the OMB and Congress can help overcome these challenges with engagement from agency and department leaders. The executive branch can also identify specific individuals within agencies who would be focused on the sharing of services, much like Chief Accountability Officers in numerous federal agencies now.
Of course, shared services will not be a panacea for our national spending, saving, revenue, and budget balancing ills. But they can be one substantial part of a comprehensive solution as well as as an excellent starting point for broader government reform.
Tim Rund, a retired career federal employee, is a Senior Principal at The Clearing, a consulting firm in Washington D.C., where he leads a number of efforts focused on shared services and organizational transformation.